NCPA - National Center for Policy Analysis

Overtime Gets an Overhaul

July 14, 2003

Labor Secretary Elaine Chao's update to the nation's antiquated overtime provisions -- first devised in 1938 -- will help clear up confusion about job categorizations and return overtime pay to the low-wage workers for whom it was originally intended, according to an editorial in the Wall Street Journal.

  • Today, only the rare worker earning less than $8,000 a year automatically qualifies for overtime.
  • Chao's rules would raise that threshold (untouched since 1975) to about $22,000, securing overtime for 1.3 million more low-wage earners.
  • On the other side, the rules would more clearly define who qualifies as an executive, manager or professional and make it harder for white-collar workers earning more than $65,000 a year to claim time-and-a-half.
  • Flexible labor laws allow companies to manage costs and use their work forces more efficiently.
  • They will give companies more freedom to create 21st-century work forces that increasingly depend more on white-collar jobs with varied time demands than on factory-floor jobs that go in eight-hour shifts.

These new laws will give non-union workers a lot more job flexibility and security. Overtime rules make it impossible to work flexible hours because companies are required to pay for extra hours rather than allow workers to save up time in exchange for working fewer hours later. Salaried workers can also be more confident of a steady paycheck when companies hit rough times, says the Journal.

Source: Editorial, "How Lawyers Work Overtime," Wall Street Journal, July 14, 2003.


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